Commenting on the decision of the Monetary Policy Committee of the Bank of England to raise interest rates from 1% to 1.25%, Kitty Ussher, Chief Economist of the Institute of Directors, commented:

“Our data shows that the high rate of inflation is of deep concern to our members, and is the main driver of pessimism among business leaders about the UK macroeconomy. We therefore welcome this rise in rates because it demonstrates the Bank’s determination to take action in the face of an unsettling macroeconomic environment.

“As the Bank itself makes clear, not all of the ‘excess’ inflation above its 2 per cent target can be attributed to global events, so there is a role for UK interest rates to play its part.

“What the economy now needs is a sense that inflation has peaked and is starting to fall back. With our own data showing very high expectations of future price rises, we aren’t at that stage yet, but today’s decision will at least help generate a sense that policy action is being taken.”